Economic liberalization laws to aid in recovery

MANILA, Philippines — The National Economic and Development Authority (NEDA) will  push for Congress’ approval of key economic bills that will help the country attract more foreign  investments especially those fleeing from China in the wake of the coronavirus disease 2019 or COVID-19 pandemic.

In an interview with DWIZ radio station Saturday night, Acting Socioeconomic Planning Secretary Karl Chua said the key bills, along with the remaining three packages of the Comprehensive Tax Reform Program (CTRP), would enable the economy to recover faster from the onslaught of the  contagion.

NEDA has been supporting the passage of several bills that will ease restrictions on foreign investment such as the amendments to the Foreign Investments Act, Retail Trade Liberalization Act, and Public Service Act.

“These amendments will be of great help in attracting new foreign direct investments especially those that are flowing out of China. If we get these, more jobs will be created in our country,” Chua said.

The proposed amendments to the Retail Trade Act seeks to ease the equity and capitalization requirements for foreign entrants in the retail sector.

Amendments to the Public Service Act, meanwhile, proposes that all transmission of electricity, distribution of electricity, and water works and sewerage systems shall make up the exclusive list of public utilities. It likewise raises the foreign ownership limit in public utilities.

The proposed amendments to the Foreign Investments Act, meanwhile, covers the lowering of capital requirements for foreign investments subject to certain conditions on technology and employment.

“All these were among the priorities in the last State of the Nation Address (SONA). So these should be continued,” Chua said.

The remaining three tax reform bills, he said, would enable more small business to participate in the economy because these would make the tax system fairer and more efficient.

After the passage into law in 2017 of the Tax Reform for Acceleration and Inclusion (TRAIN) – which lowered personal income taxes, but increased taxes on cars, tobacco, sugar-sweetened beverages and fuel – economic managers are pushing for the passage of the Corporate Income Tax and Incentives Rationalization Act (CITIRA), which will reduce the corporate income tax, but rationalize the tax incentives given by the government to businesses.

Other pending tax bills are Package 3, which deals with property valuation and Package 4, which will rationalize income from financial instruments.

Passing the CITIRA into law is also expected to end the climate of uncertainty which prevented businesses from making investment decisions.

Among Chua’s marching orders from President Duterte is to craft a detailed recovery plan for the economy as it emerges from the ravages of the pandemic.

Most of Luzon, the country’s economic powerhouse which accounts for 70 percent of total economic output, remains under quarantine until May 15.

Quarantine rules have been eased in  areas with lower risk of virus transmission and some economic activities have been allowed to resume.

Most affected by the restrictions in mobility were the tourism and retail trade sectors.

Chua said the right timing on lifting the lockdown and policy response would be the cornerstones of economic recovery amid the possibility of a recession this year.

“What’s important is how fast we will be able to recover and this depends on two things: our decision to be cautious about the health of the population and the policies that we will implement to speed up recovery,” he said.

Other than the passage of economic liberalization laws, Chua said it would be crucial to implement and resume priority projects under the Build Build Build program to create more jobs and sustain gains on poverty reduction.